When first considering a purchase of an investment property, all buyers will of course have their own individual set of priorities. How you choose to assemble those priorities will decide which avenue of real estate investing you will follow. If one of your top priorities happens to be value retention as well as growth, then I suggest you forget every axiom you have come across to date in the field of buying investment real estate, and buy the ugliest investment piece you can find. If the condo smells like dog pee- bingo.
Under the guise of “You don’t sell the Steak, You sell the Sizzle”, clearly the opposite would have to be the best advice for a buyer of real estate investment parcels. Buy the steak- one with good bones, a good location, in relatively good mechanical condition., and without an sizzle. Almost all novice buyers- whether investors or owner-occupants can not escape the basic need to have an emotional attachment with what they buy, and will often times pass up the parcels that are either smelly,dirty, or just don’t show well. The less demand, perhaps the softer the price, as a property consistently over-looked can fatigue a seller, and soften his stance on his ultimate sale price. Even the Rittenhouse Square Condos in downtown Philadelphia can have depressed selling prices says John Herniak at Prudential Fox and Roach Realtors. “Investors here in town are visual, and will often pass up pieces based primarily on an emotional level”. Though investing in real estate is often thought of as on an unemotional level, many buyers will let emotions guide their decisions.
Going against the tide, keeping your emotions in check, and buying the cosmetically ugliest investment piece you can find might just save you a bundle. A little sweat equity can go a long way in quickly raising the value of any somewhat neglected property.
Thanks to Mark Wade of CenterCityCondos.com for this contribution on choosing a property to purchase as an investment.